ADP Research Institute®

ADP Workforce Vitality Index
3rd Quarter 2017

ADP Workforce Vitality Report Shows Deceleration in Growth

The ADP Workforce Vitality Index, which represents the total wages paid to the US private sector workforce, is 115.1 in the third quarter of 2017 (3Q2013=100, Not Seasonally Adjusted). The Index is driven by a number of metrics including job holders’ wages, job holders’ hours worked, job switchers’ wages, and total employment. The Index grew by 3.5% year over year in the third quarter of 2017, down from 4.2% growth in the second quarter but still representing steady progress. Employment growth remains steady just below 2%. Wage growth has slowed a bit in the third quarter. Wage growth of individual job holders across industries and regions has increased by 4.4% year over year in the third quarter, consistent with previous readings. Those workers who have changed jobs saw their earnings increase by 3.3%, the lowest level of growth in several years. A large portion of job switchers are part-time workers whose wages do not increase necessarily when they switch jobs. An alternate way to examine job growth is to look only at full-time workers removing the impact that shifting hours may have on the data. Workers who switched from a fulltime job into new fulltime jobs perform much better than when looking at all switchers together. Full time job switchers accrue larger wage gains than their job holding peers, but the same trend emerges with job switcher wage growth showing signs of weakness while wage growth for job holders remains a model of consistency. This has caused the gap between job holders and job switchers to narrow substantially compared to previous years.


ADP Workforce Vitality Index

115.1 3.5%
Change from 3Q 2016

Index Indicators (Yearly growth)

Total Employment Growth 1.9%

Job Turnover Ratio 27.4%

Change in the Hours Worked -0.2%

Wage Growth for Workers Who Stayed in Jobs 4.4%

Wage Growth for Workers Who Changed Jobs 3.3%


SIZE
Small
< 50 Employees
122.3
Midsized
50-499 Employees
112.2
Large
500-999 Employees
115.4
Enterprise
1000+ Employees
114.0

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REGIONS AND KEY STATES
Midwest
113.2
Illinois
108.3
Ohio
111.9
Michigan
116.5
Northeast
110.9
New Jersey
109.7
New York
111.1
Pennsylvania
106.0
South
116.0
Florida
122.0
Texas
115.3
West
119.4
California
118.6
Washington
127.1
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INDUSTRY
Construction
130.6
Manufacturing
108.6
Trade & Transportation
112.1
Finance
117.9

Professional Services
115.3
Education & Healthcare
117.2
Leisure & Hospitality
124.8
Information
112.6

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GENDER
Male
113.6
Female
117.7

AGE GROUP
16-24 Years Old
127.9
25-34 Years Old
116.6


35-54 Years Old
109.5
55+ Years Old
124.9


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FULL-TIME / PART-TIME
< 35 Hours
115.5
≥ 35 Hours
112.6

TENURE
1-3 Years
119.9
3-5 Years
136.8
5-10 Years
96.1
10+ Years
113.8




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Note: The ADP Workforce Vitality Index analyzes aggregated and anonymous employee-level data. The findings are based on actual data derived from about 340,000 U.S. companies and approximately 22 million private-sector U.S. workers. The privacy and security of the data is safeguarded by multiple layers of protection and no confidential client data is used in the ADP Workforce Vitality Index. The aggregated and anonymous data used in the report means that no information on individual ADP clients or their employees can be identified.



Small companies and those with 50-499 employees are leaving their competitors in the dust when it comes to hiring. These companies are adding to payrolls at a rate of 3.8% and 3.9%, respectively, over the past year, which represents a strong increase from previous readings. Employment gains at companies with 500-999 employees have dropped off from the outsized gains in previous quarters. Payrolls still expanded by 1.9% year over year, but that is down from a 9% gain a year ago. The largest companies (1000+ employees) have started to struggle a bit with employment declining over the year for the first time since mid-2016. The largest companies have faced challenges stemming from low commodity prices and a weak dollar. Wage trends for holders are not nearly as variable across company size as employment and WVI. Across all company sizes, wages for job holders are growing at a rate between 4.1-4.7%. Within that range, larger companies are providing slightly higher wage increases than small companies. Wage growth for job switchers has also been relatively stable. Switchers are getting 3% increases at the smallest and largest companies, while getting 3.7% at midsize companies. Vitality for men has surpassed women for the first time in nearly three years because the slowdown in WVI in growth was more pronounced among women. Men’s employment growth has started to accelerate, rising from less than 1% in the middle of 2016 to 2.3% in the third quarter of 2017. At the same time, women’s employment growth has weakened from 3.0% a year ago to just 1.5% in 2017Q3. The 0.8% growth gap in 2017Q3 is the largest advantage in favor of men in over three years. The recent uptick in some male-dominated industries, such as manufacturing and natural/resources and mining, help to explain the differing trends.

“Despite the deceleration we’ve been experiencing in overall wage growth we continue to see evidence of the strengthening labor market when you look at specific areas,” said Ahu Yildirmaz, co-head of the ADP Research Institute®. “As employers strive to retain skilled workers, we see wage increases for full-time job holders in all sectors. Most notable are the information and construction industries.”





ADP Workforce Vitality Report Shows Deceleration in Growth


About the Report

The ADP Workforce Vitality Index is a comprehensive, quarterly measure of U.S. workforce dynamics that looks at key labor market indicators, such as employment growth, job turnover, wage growth and hours worked. This report yields deeper insights into workforce dynamics and trends than previously available.

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For media inquiries about the ADP Workforce Vitality Index, please call (973) 868-1000 or email Michael Schneider.